Commodities Roundup: EV battery demand; DOE awards $19M for rare earths, critical minerals initiatives; Auto sales strong in April

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Here’s a quick rundown of news and thoughts from particular commodity markets, including materials price support from EV battery demand, the Department of Energy's funding of projects to boost production of rare earths and critical minerals, hot rolled coil prices and much more.

MetalMiner, a sister site of ours, scours the landscape for what matters. This week:

Price support from EV battery demand

As automakers and, in turn, consumers continue to incrementally embrace electric vehicles, that demand is also supporting prices for battery materials.

Among those battery materials is cobalt, of which a majority of global mine output comes from the Democratic Republic of the Congo.

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"The Financial Times reports that cobalt prices jumped 40% in Q1, laying the blame solely on battery demand," MetalMiner' Stuart Burns reported. "Of all the component metals in EV batteries, cobalt faces the most constrained supply base. A very significant percentage of that cobalt still comes from the Democratic Republic of the Congo.

"While some buyers, such as China’s CATL, have no reservations about investing in countries that face allegations of child labor. The firm recently invested $138 million in an undeveloped copper and cobalt resource in the country.

"Others are voting with their wallets. Those companies are restricting contracts to suppliers in Russia, Australia, Philippines and even, in the case of BMW, from Morocco."

Nickel price movements

In other EV battery materials, Burns took a look at recent nickel price movements.

"Indonesian mine output grew by an incredible 53% in the first two months of this year," Burns explained. "All that ore is being processed and is likely feeding into domestic refiners to show up as exports of ferro alloys and refined nickel in the months ahead.

"Nickel prices picked up a little late last month on the back of surging base metals prices. However, high LME stocks are a reminder the market remains in surplus.

"It would take a significant change of narrative to see prices testing previous highs from late February anytime soon."

Dept. of Energy awards $19M toward rare earths, critical minerals initiatives

Speaking of EV battery demand, the Department of Energy will award $19 million toward 13 projects aimed at production of rare earths and critical minerals.

The move comes as the US continues to explore methods to boost domestic production and begin to curb its dependence on China for the vital materials.

The Department of Energy's Office of Fossil Energy’s National Energy Technology Laboratory (NETL) will manage the selected projects.

Construction spending rises in March

US construction spending reached a seasonally adjusted annual rate of $1,513.1 billion, the Census Bureau reported. The March rate marked an increase of 0.2% from February and 5.2% from March 2020.

Construction spending the in first quarter rose by 4.5%, totaling $328.3 billion.

Meanwhile, the Architecture Billings Index checked in at 55.6 for March (any reading greater than 50 indicates billings growth).

Auto sales post strong April

US auto sales continue to show strength.

Last week, J.D. Power and LMC Automotive forecast US new-vehicle retail sales were headed for a record April.

Underlining the impact of the onset of the pandemic, Ford reported April sales jumped 57.1% year over year. Meanwhile, Honda sales surged by 171% year over year.

Meanwhile, in China, sales reached 2.53 million vehicles in March, the China Association of Automobile Manufacturers reported. Through the first three months of the year, sales in China totaled 6.48 million vehicles, marking an increase of 75.6%.

HRC prices continue to rise

In Europe, hot rolled coil prices continue to make gains, MetalMiner's Christopher Rivituso reported. (As we've noted here previously, HRC prices have been rising in Western Europe for quite some time now.)

However, buyers are starting to become wary of committing to contracts at current elevated prices.

"Last week, China also canceled its rebate for the 13% value-added tax on HRC exports from the country," he reported. "The cancelation went into effect May 1.

"While those moves might lend support to prices in Europe, industry watchers and traders are questioning how much further HRC could continue its upward trajectory.

"Prices in Europe might continue rising for now, sources said. However, they warned that buyers are becoming more cautious about committing to new deals."

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